New details are emerging on the Senate Health, Education, Labor & Pensions Committee’s (HELP) health care bill, originally slated for release tomorrow, but now pushed back to next week.
According to news reports, “a brief, unofficial summary of the Senate health committee’s draft reform proposal circulating among Washington lobbyists Wednesday includes a public plan option that would pay providers — who would be required to participate — 10 percent more than Medicare rates.”
There is more:
– An individual and employer mandate for coverage
– The legislation would expand the Medicaid program to cover individuals earning up to 150 percent of poverty
– It would subsidize people earning up to 500 FPL to purchase insurance through state-based insurance exchanges
– Expands the Children’s Health Insurance Program (CHIP) to people up to age 26
– Establishing a “federal health reserve” type entity called a Medical Advisory Council that would assist in designing minimum standard benefits
On quick glance, this is very good news for public option proponents who were concerned that the HELP legislation would build on state-employee pools and establish fifty different plans around the country or develop some kind of trigger mechanism. This summary suggests that while providers participating in Medicare would also have to offer services in the new public option, the reimbursement arrangement would give the new plan leverage by allowing it to piggyback on Medicare’s reach. Reimbursing providers less than private insurers, but paying them more than Medicare rates allows the new public option to pass on the negotiated payment rates to consumers in the form of lower premiums.
As Lester Feder, who is covering health care reform for The Nation, explained it:
Of course, we’ll save the most money if the public plan pays what Medicare pays. But short of that, any public plan will be more effective if it doesn’t have to negotiate the rates it pays providers on its own, but can piggy back on the rates the (much much much) larger medicare program can negotiate with providers. It’s about market leverage. Let’s say I run a small chain of department stores. It’s expensive for me to negotiate with my suppliers, and if I’m not very big I won’t get great deals. So instead I say, “I’ll pay you what Walmart pays plus 10%.” Then I’m benefiting from Walmart’s ability to negotiate with suppliers.
There are some political pitfalls here — which I will re-visit– but from a cost-containment perspective, it makes sense.